I try to look at it from a big, worldwide picture. True global wealth (unbubbled) is a function of energy. Wealth creating goods and services require energy. World wide energy production has flatlined. Not enough capital has been invested to drill in the expensive exotic locations to keep up with demand. Net energy is probably declining if you substract the great expense of extracting energy. If we are limited in energy, we are limited in growth. We will never see economic growth as in the past, because we're pretty much running up against physical limits of the Earth. Certainly we are at the diminishing returns level.

This article poses a very cheery optimism that is noot warranted. Wall Street, Insurance Companies and Oil Companies, Congress and the Senate, etc. are definitely happy with themselves but it remains at the expense of the rest of us. Why doesn't Wall Street have a Conflict of INterest Program like the one the medical community is finally making realistic? For example, Harvard and Yale professors who are getting money from firms to write papers for them etc. Of course they wouldn't say anything unflattering when a professor has his/her hand in the pockets of Wall Street firms.

The US borrowed too much money and the poor have to pick up the tab via inflation whilst the rich get richer. That works until the poor have nothing to lose, then you have a revolution. The US is at risk of having another civil war. The dollar is collapsing. In terms of stimulus the US economy has been on steroids for years and its testicles have been damaged beyond repair.

I fear that the US economy is currently in or near recession. Nominal GDP is growing at 4.2% per annum. CPI and GDP deflators contain a large weight to owner equivalent rent which introduces inconsistencies due to the proportion of fixed rate mortgages in force. Basically, using the CPI as an example, 25% of the basket is OER which with Case Shiller falling at 3% and mortgage rates falling implies a cost that is falling at circa 8%. The rest of the CPI must therefore be rising at 5.4%. Applying an inflation rate of 5.4% to nominal GDP would result in real GDP retreating, not gaining, at -1.2% YOY.

The way to change it is not through interest rates or trade or any other high-brow topic The Economist often chooses to focus on too strongly, but rather on SOCIAL CHANGE. Unfortunately politicians's backgrounds are still too far removed from the lives of average Americans, let alone the lives of America's poor, to either comprehend or care about this problem.

How did The Economist keep a straight face when writing this article. The US is continuing to regrow in 2011 in the same manner it has become accustomed to for the past few decades... by gobbling up more debt! The government, its companies and its citizens are again loading up on debt and plundering their savings. It is quite astonishing the The Economist praises this strategy.

I don't believe this is a promising sign in the economic 'recovery'. It seems The Economist totally disregards the magnitude of debt-fuelled spending by the gov't. The US runs a deficit that is roughly 10% of the entire economy and only managed a 'growth' of less than 3%. Ignoring state and local governments who are also spending more than they have, that means that the economy would have shrunk by ~7% if not for this stealing from the future to pay for the present. Pumping millions of volts into a dead body may make it twitch for a split second but it doesn't mean that the patient may be considered to be recovering.
For a historical perspective, the previous time that the federal government ran a deficit ~10% of GDP was in the early 40's because of WWII but at that time there was full employment and GDP growth exceeded the deficit's share of GDP as follows:

As well, GDP growth back then was in manufacturing while today's Fed policies are a windfall only for bankers and the financial sector who are still pretending their toxic assets hold unrealistic high values.

Just a side question. If commodity prices go up it is seen as a sign of strength of global economy. Is this still true if these commodities are scarce and we have few military conflicts affecting supply?

That people even believe the statistics the government puts out is beyond me. They might as well be considered works of fiction considering how much they are fudged.

But even beyond that, to think a real recovery is in place is laughable. What would this recovery be based on? More consumer spending? Higher consumer confidence? An economy based on consumption of Chinese goods is NOT a real economy, it's a scam. The Chinese are getting scammed into thinking our paper is actually worth something.

The world is waking up and realizing our paper is worthless -- the dollar is already nearing record lows. Once they completely dump it and stop buying our debt, this "recovery" is going straight to hell.

"College grads want to work for the government because they provide good health care and a pension. The problem is that the government provides this, it's that the private sector does not. You shouldn't blame government unions for insisting on the rights that the rest of you so easily gave up. It's nothing more than petty jealousy. If you don't like the disparity then demand better treatment from your employer. They could easily afford it, but the management would rather pay itself more and you less - a vigorous income tax would solve that problem."

...and the fact that as a public sector worker by the very nature of the job face no international competition for your work is completely irrelevant to the conversation I guess... right? Wake up. The reason our manu/indu in particular gets hit so hard is we have allowed our companies to create the same situation in China that existed in the late 1800s early 1900s in the USA. Look up the term 'Train Baron' and get back to us. Basically if the USA and the EU put a 'fair worker's levy' on components\goods\services from any country whose 'worker's safety and compensation environment' came no where close to ours it would do two things. The first thing is force those countries companies to improve the workplace for their citizenry if they want to survive. That in turn will better 'level the playing field' allowing USA and EU workers fair competition for productivity per 'dollar'. Why don't we? Look up the term 'Fascism' and get back to me.

Using a more punitive income tax ratio than today won't increase tax revenues as much as you would like to think. Extremely wealthy people don't usually have much 'income' per se. They have capital gains coming out their ears (or income from property rents, etc.). Taxed differently and the more you tax that the less money is invested in companies to allow for growth. No, best bet is a flat income tax with no deductions except for education and child care. No, you really want to try to 'redistribute wealth' via taxation? You do it with Value Added Taxation (VAT) taxes. Wealthy people frequently buy expensive things. Second homes, additional and/or very expensive vehicles beyond the number of drivers in the household, larger home entertainment units, etc. etc. Add VAT to those directly at the sales point. We do need to tell the companies that keep complaining about the lack of skilled workers to then pony up some cash via corporate tax and shut up about it. They continually threaten to move operations overseas because taxes are too high and then complain the workforce isn't trained/educated well enough... which is it going to be? Education and good early child care have quite possibly the greatest returns on investment dollars long term to the economy than ANY other investment we can make. Infrastructure to support economic growth comes a decent second, but the greater the overall education level the populace have the greater the prosperity of the population as a whole. That has been a universal truth for the entire history of mankind.

hmackenzie: I'm with you on this. The structural problem, which goes even deeper than a housing bubble, is the competitive disadvantage of U.S. labor. To think that a relaxation of environmental and labor laws would even the field is to believe in the tooth fairy. It's a trope with which capital and its supporters in Congress distract the public and extend their profits from underdeveloped and retrograde economies.

Dudley thinks US unemployment is cyclical not structural... as does Bernanke and Krugman... The US had a huge bubble in housing which came to a sudden and dramatic halt. To think this has no effect on structural unemployment is rediculus to the point of absurdity

Trillions of printed dollars and near zero interest rates will surely temporarily improve the economy.

That's a no brainer.

But what's really taking place.

It's akin to the shoe manufacturer. The U.S. Government comes to Mr. Shoe and says "we'll spend trillions of dollars and advertise your shoes." The shoe maker replies "Thanks, then I can show a big profit and hire more workers."

Sure enough, the shoe maker makes a killing for months. GDP goes up, unemployment goes down, the U.S. Government announces "We're in an economic recovery, see our stimulus policies are working."

The masses are easily fooled and read the headlines of recovery with hope in their hearts and blindfolds over their eyes.

Time this joke correctly because when it's over and there's no more stimulus money or zero interest rates, the U.S. economy and bloated stock market are going to sink fast like a stone in the pond. Place your short bets.

It's all politics and assuredly aimed at propping up the U.S. economy until the 2012 elections.

Sadly, a joke played on innocent Americans; The price will be paid by their children and grandchildren.

"The household survey used to calculate the unemployment rate shows much more rapid employment growth since November (1.4m) than the separate survey of establishments that yields payroll employment (630,000). Exactly why is a mystery."

The household survey includes the "self employed." The wage and salary figures from the establishment survey do not.

There has been a long term shift to self employment, particularly in some metros such as New York and Los Angeles. The household survey showed a far greater gain in the mid-2000s and a far greater loss in the recession. Although the data comes out late, you can track trends in wage and salary employment compared with proprietors employment in data from the Bureau of Economic Analysis, in the Local Area Personal Income release. Data for 2009 is due in May.

If you want to be optimistic, you can say the economy is becoming more entrepreneurial.

But many are the "self employed" employees in all but name -- and non-wage benefits. The federal tax code prohibits income tax exclusions for health care and retirement benefits for any workers (such as the CEO) unless they are made available to all workers equally. Companies get around this by making some workers, particularly those in younger generations who are poorer, "independent contractors" or "freelancers" -- permalancers in one wry word some of them use.

It is to crack down on this practice that the health care law required companies to report all the people they contract with, something the Obama Administration appears to be backing down on. The politics of that debate occurred without a single media outlet reporting the reason for the provision, or even the nature of the "self employment" trend.

okne, higher food prices do not improve nutrition. Better foods become relatively more expensive. People buy more of shitty, high-calorie, low nutrient-rich foods. That's why obesity is so prominent among the poor.